Fitch questions high Apple debt rating

Jonathan Shapiro (via AFR) |
April 30, 2013

Fitch Ratings has questioned the high credit ratings assigned to Apple ahead of its return to the debt capital markets, warning that risks in the consumer electronic giant’s business outweigh the benefits of its huge cash holdings

There has been increasing pressure from Apple shareholders for the electronics giant to start returning more of its huge cash stockpile in the form of dividends. Photo: Justin Sullivan

Credit rating agency Fitch Ratings has questioned the high credit ratings assigned to the consumer electronics giant Apple ahead of its return to the debt capital markets, warning that its business risks outweigh the benefits its huge cash holdings

Apple is set to issue about $15 billion to $20 billion of bonds per annum for the next three years to finance a $100 billion return of capital to shareholders after it faced pressure to return some of its cash pile to investors.

Apple has asked Goldman Sachs and Deutsche Bank to open discussions with investors ahead of a bond issue, Bloomberg news reported.

Rating agencies Standard & Poor's and Moody's placed high AA+ and Aa1 credit ratings to Apple, but Fitch, which does not formally rate Apple, says it would assign a lower rating in the high single-A category.

"Inherent business risk that overshadows a significant liquidity cushion when evaluating long-term credit ratings for consumer-centric hardware companies generally leads us to assign these companies a Long-Term Issuer Default Rating (IDR) at or below the 'A' category," Fitch said in a note to clients.